PPG rolls up Comex for $2.3B

NEW YORK (The Deal) -- PPG Industries (PPG) said Monday it has a deal in place to acquire Consorcio Comex for $2.3 billion in cash, stepping in after a failed effort by rival Sherwin-Williams (SHW) to buy the Mexican coatings manufacturer.

Privately-held Comex of Mexico City is a manufacturer of paints and other coatings sold at more than 3,600 stores in Mexico and Central America. The company employs 3,900 at eight manufacturing facilities and six distribution centers, generating sales of about $1 billion in 2013.

Sherwin-Williams had agreed to buy Comex in 2012 for $2.34 billion, but that deal fell apart after Mexican regulators objected after noting the combination would control more than half of the Mexican market. Cleveland-based Sherwin-Williams acquired the U.S. and Canada operations of Comex for $165 million in September, but terminated the offer for the rest of the company in April.

Comex in May sued Sherwin-Williams, claiming the U.S. company had not tried hard enough to get the deal done.

PPG chairman and CEO Charles E. Bunch in a statement said that his company currently has a "negligible architectural coating presence" in Mexico and Central America, calling the purchase complimentary to PPG.

"Comex is a high-quality, well-managed business with a long heritage of excellent customer service and leading, well-recognized regional brands," Bunch said. "We are excited to participate in the growing Mexican economy and look forward to working with the Comex team as we integrate the business into PPG."

PPG intends to fund the purchase with cash and short-term investments on hand, but Bunch said that a portion of the price could be funded through additional debt. PPG had $3 billion in cash and short-term investments on hand as of March 31, but the company on April 17 said its board had approved a $2 billion in share repurchases and a 10% increase to the quarterly dividend.

Comex CEO Marcos Achar Levy in a statement said that "being part of PPG gives us new opportunities and synergies that will allow us to continue to significantly grow in our markets."